Markets have been a bit volatile over the past few weeks, and the future is uncertain. For many investors, these moves can be troubling because itâs been many years since weâve had a substantial declineâwhether we do or do not from the current point (and, for the record, I think itâs much more like the market surprises us with new highs sooner than anyone would think possible), we need to spend some time thinking about how to manage our portfolios and manage ourselves in a market decline.
First, watch YOUR LANGUAGE
âąLabels are meaningless: Correction, pullback, âjust words
âąListen to the terms people use: fake, rigged, propped up, short covering rally. The words we use matter because they carry emotional meaning.
UNDERSTAND MARKET PSYCHOLOGY
âąMarket moves are mostly emotional. If you donât understand that, youâre doomed to be at the mercy of the market.
âąThe news doesnât matter (for prediction.) You need a plan for how you read the news!
âąMarket movements arise from competitive action of traders driven by both reason and emotion. This is why the market creates such emotional reactions in traders and investors.
âąThe âpermabearsâ are interesting (and dangerous).
âąLearn to monitor and understand your own emotions and reactions.
UNDERSTAND THE REALITY OF THE MARKET
âąMarkets are mostly unpredictable. No one knows what is going to happen in the future with any degree of reliability.
âąBest guide is statistics, but need to understand what this means: ~On average, stocks go up over long time periods. ~Hard to short stocks. ~Strange things happen on shorter time spans. ~What is predictable in the future is fuzzy and uncertain, and deviations can be large.
âąMost of the things people talk about follow the market, so they canât be used to predict the market! ~The market is the leading indicator. (Dow)
WHAT TO DO?
âąThe biggest mistake investors make is selling into declines. ~How to avoid? Donât do it. ~Best plans are fading (going against) moves in stocks. If you implement this one rule, youâll be ahead of the game.
âąAlways use limit orders. Always. Always.
âąBuy at steep discounts, planning to hold for multiple years. ~Be a predator ~Buy âstupidâ prices for things you are reasonably sure arenât going out of business/away
âąBe your own manager. ~Break destructive patterns ~Stop mistakes before you make them
CONSIDER SHORTING Shorting is not evil or (that) complicated, but this is a topic for another day.
Listen To 'After Dark - MrKitty' Such A Nice Music in Time like this.....(this music is overrated lol)
Informationen och publikationerna Àr inte avsedda att vara, och utgör inte heller finansiella, investerings-, handels- eller andra typer av rÄd eller rekommendationer som tillhandahÄlls eller stöds av TradingView. LÀs mer i AnvÀndarvillkoren.